Tuesday, 20 June 2017

Mania Galore!

Baltic Dry Index. 848 -03     Brent Crude 46.92

“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one.”

Extraordinary Popular Delusions and the Madness of Crowds.”

We open today with Trumpmania meets Tulipmania, and both explore the “Extraordinary Popular Delusions and the Madness of Crowds.” What could possibly go wrong?

Tue Jun 20, 2017 | 6:23am BST

Asia shares near two-year high as U.S. hi-tech rebound boosts mood

Japan's Nikkei rose more than 1 percent to a near two-year high on Tuesday, encouraged by rebound in U.S. hi-tech shares as investors bet on solid growth in the economy and corporate profits globally.

MSCI's broadest index of Asia-Pacific shares outside Japan held firm near a two-year high struck last week, but was little changed on the day, with gains in high-tech firms offset by a decline in Australian shares.

A big focus for Asia is whether index provider MSCI will later in the global day open up its Emerging Markets Index to Chinese mainland shares which have restricted access for foreign investors.

Many investors expect the so-called A shares that make up the majority of China's stock market to likely be included after being rejected on three previous occasions.

The blue-chip CSI300 index of mainland stocks was down 0.2 percent.

Wall Street's S&P 500 and the Dow industrial average hit record highs as technology shares bounced back after some sudden falls earlier this month.

"Hi-tech shares just went through a correction. Their valuation is not that expensive, standing far below their levels at the peak of the dot-com bubble in 2000. Given that their profits are expected to see exponential growth in coming years, it is premature to say the rally in hi-tech shares is over," said Mutsumi Kagawa, chief global strategist at Rakuten Securities.

U.S. financial shares also gained as U.S. debt yields rose after New York Federal Reserve President William Dudley, a close ally of Fed Chair Janet Yellen, said U.S. inflation should rebound alongside wages as the labour market continues to improve.

The 10-year U.S. Treasuries yield edged up to 2.184 percent from a seven-month low of 2.103 percent touched on Wednesday, following surprisingly weak U.S. inflation data.

"Even though the Federal Reserve is about to shrink its balance sheet, possibly as soon as in September, U.S. bond yields are kept at low levels, which are very comfortable for stocks," said Norihiro Fujito, senior investment analyst at Mitsubishi UFJ Morgan Stanley Securities.

Next, China seeks to become the world’s dominant futures market of choice. In English, “terminal market” for any older dinosaur traders like me. China aims to be the global commodity futures market from soup to nuts. Nuts, sounds about right to me, without real rule of law, and a multi-party, democratic state. What China’s communist party gives with one hand, China’s communist party can take away with the other. Besides, leading CEOs still have a habit of disappearing in today’s communist run China. Something all too likely to start happening in GB, if the New Communist Labour Party under Corbyn, ever comes to power.

Fri Jun 16, 2017 | 5:14am EDT

From dates to power, China's exchanges rush for futures sweet spot

China's major commodity exchanges are scrambling to launch futures contracts on a range of products - from dates to electricity - as they move to tap investor risk appetite and offer the vast industrial complex ways to protect revenue.

On Friday, executives from the top three exchanges - Zhengzhou Commodity Exchange, Shanghai Futures Exchange and Dalian Commodity Exchange - reeled off 14 products from fruit to chemicals to power that they are studying as possible candidates for new derivatives.

The race to introduce contracts, designed to help farmers, utilities and steel mills protect against big price swings, comes as Beijing aims to be a major hub for exchange-based trading and prepares to prise open long-closed markets in the world's second-largest economy to foreign investors.

"The plans for futures such as dates, apple, anthracite (coal) fit into China's plan to develop its real economy," said Liu Jin, director of research at COFCO Futures.  

"We are seeing market regulators decreasing the varieties of financial futures and increasing the number of commodities futures."

A record 4.14 billion futures contracts traded last year, up 16 percent from 2015, according to China Futures Association.

The moves will stir the debate over the role of speculators, who have caused wild gyrations in everything from steel to eggs to corn in recent years, as well as the heavy-handed intervention by regulators which may scare off some players.

A variety of obscure futures contracts already traded in China, like glass, silicomanganese, and bitumen, offer price discovery and a gauge on industrial activity in the country.

Many of the contracts discussed on Friday have been in the works for a while and complement existing domestic and international markets - SHFE's long-awaited crude oil contract could be a serious contender on the global market and Dalian has been looking at stainless steel and scrap contracts for a year to expand its metals offering.

Anthracite would fit alongside Zhenzhou's thermal coal futures, which have attracted more liquidity since its launch two years ago. China is the world's top buyer of the fuel.

Others like red dates are niche, low in volume and unique to China - dates are one of the nation's favorite fruits, a staple in tea and porridge and considered crucial for health while cashmere, apples and silk point to China's role as the world's top producer.

In Middle East news, everyone seems to be choosing sides in the fight over Qatar’s natural gas. As usual these days, the USA seems to be on both sides in this brewing fight. Presumably, once US backed Saudi Arabia deposes the Qatari Royal Family and controls the Qatari gas fields, the plan is to horizontally drill into the Iranian half of the shared gas-field, provoking Iran to attack Qatar for stealing their gas. Sound familiar? It’s what Kuwait did to Saddam Hussein’s Iraq triggering the attack in 1991, after US Ambassador Glaspie and the US State Department, gave Saddam Hussein the OK to invade Kuwait. It worked in 1991, why not once again in 2017?

In a now famous interview with the Iraqi leader, U.S. Ambassador April Glaspie told Saddam, ‘[W]e have no opinion on the Arab-Arab conflicts, like your border disagreement with Kuwait.’ The U.S. State Department had earlier told Saddam that Washington had ‘no special defense or security commitments to Kuwait.’ The United States may not have intended to give Iraq a green light, but that is effectively what it did."

Mon Jun 19, 2017 | 1:14pm BST

Turkish troops hold exercises in Qatar in show of support

Qatar held military exercises with Turkish troops on Monday, demonstrating one of its few strong alliances after two weeks of ostracism and economic isolation imposed by neighbours which accuse the U.S. ally of supporting terrorism.

Qatar's state-funded pan-Arab news channel Al Jazeera showed footage of a column of armoured personnel carriers moving through the streets.

It reported that additional Turkish troops had arrived in Qatar on Sunday for the exercises, although military sources in the region told Reuters the operation actually involved Turkish troops that were already present rather than new arrivals.

Turkey is one of the few powerful countries in the Middle East to stand squarely by Qatar after Saudi Arabia, Egypt and several other states proclaimed it a supporter of terrorism and cut off all economic and diplomatic ties.

Qatar, the world's richest country per capita, has used its wealth over the past decade to exert outsized influence in the Middle East, backing factions in civil wars and revolts across the region.

It denies supporting terrorism and says it is being punished for straying from its neighbours' political line of backing the region's authoritarian hereditary and military rulers.

"The blockade has been ongoing for two weeks and the blockading nations have offered no formula for resolving the crisis," Sheikh Saif Bin Ahmed al-Thani, Director of Qatar's Government Communications Office, said in a statement on Monday.

In UK news, it’s still all about Brexit and that needless, tragic fire, where the London Fire Brigade unintentionally added to the death toll, by providing the disastrous wrong advice to remain in the apartments.

We open with Bloomberg’s editors still desperately pushing for a Brexit betrayal. What part of democracy don’t the Great Vampire Squids and their mouthpieces understand?

A Plan for Brexit

How to avoid a chaotic exit before the time for talks runs out.
by The Editors
19 June 2017, 07:25 GMT+1
With the start of Brexit negotiations looming, the British government has only the most tenuous grip on power. Amid paralyzing uncertainty, how can the main actors -- Prime Minister Theresa May, opposition leader Jeremy Corbyn, and government leaders across the European Union -- make their way forward?

The main thing is to agree to reach a deal of some kind before the U.K. officially leaves the EU on March 29, 2019. If this doesn’t happen, the result will be a chaotic exit that would be terribly damaging for the U.K. and pretty bad for the EU as well. It’s a needless risk. The way to avoid this so-called cliff-edge scenario it is to aim for a transitional accord that allows as much time as necessary to design a longer-term relationship.

Granted, achieving even this limited short-term deal won’t be easy. But it’s possible, and in some ways recent events may help.

May’s immediate problem is she has no majority in Parliament. To get the necessary legislation passed, she will need either to unite her bitterly divided party or gather cross-party support for her Brexit proposal.

At the moment, the latter looks more feasible. To that end, she should propose for Labour’s consideration a transitional arrangement, based on membership of the European Economic Area. This would allow membership of the EU’s single market, financial-services “passporting” and other valuable trade preferences, but it would also involve free migration to and from EU countries and leave the U.K. subject to EU lawmaking with next to no political representation.

That’s a constitutionally unattractive and indeed unthinkable long-term arrangement -- but workable as a short-term expedient, and vastly better than the cliff-edge. May could never unite her party around this idea: Hardline Tory euroskeptics would have a collective breakdown at the very thought. That’s where Corbyn comes in.

The Labour opposition could and should back a proposal along these lines. After all, it’s a variant of the softer Brexit members have been vaguely advocating -- an approach that prioritizes economic stability at the price of recovering less national sovereignty from the EU, especially over immigration. Corbyn could sell this as a win to his supporters, and it would be. May could grit her teeth and let that happen, emphasizing the need for national unity.

June 19, 2017 Updated 13 hours ago

British foam association joins call for study of deadly fire

London — The British Urethane Foam Manufacturers Association (BRUFMA) is backing a call for a "full and proper investigation" into all the circumstances of the recent Grenfell Tower fire in London which has so far claimed 79 lives.

The fire happened late on June14 and into June 15 at a subsidized apartment tower block in London. According to documents seen by Urethanes Technology International, a sister publication of Plastics News, material from Celotex designated Celotex FR 5000, was specified in a planning note of 2012. 

However, the firm said on its website that it has been contracted to supply RS 5000 boards.
Simon Storer, chairman of BRUFMA, said "we know it [FR5000] was specified originally, but whether it was used, where it was used and whether it was used correctly are questions need to be answered as quickly as possible. We all want to understand what happened for the sake of the residents, the sake of the industry and everybody else involved."

Storer added that although the material is specified in the planning note, "the work wasn't started until 2016, it's not unusual for product replacement to occur because of changes in contractors."

He called for the investigation to establish "what other work had been carried out, to what standard." as part of the public inquiry.

----A statement on Celotex website reads:

"With the rest of the nation our thoughts continue to be with those affected by the terrible fire at Grenfell Tower in London. On Wednesday, as soon as we were able to, we confirmed that our records showed a Celotex product (RS5000) was purchased for use in refurbishing the building. We wanted to provide an update to that statement and provide further information as we are able to.

"It is important to state that Celotex manufacture rigid board insulation only. We do not manufacture, supply or install cladding. Insulation is one component in a rainscreen system, and is positioned in that system behind the cladding material.

"As we previously stated, our records show a Celotex product (RS5000) was purchased for use in refurbishing the building. This product has a fire rating classification of Class 0, in accordance with British Standards. Celotex RS5000 is the insulation component specifically tested as part of a system to British Standard BS8414-2:2005. When the system is designed and installed in line with this, RS5000 meets the criteria set out in BRE Report BR 135 'Fire performance of external thermal insulation for walls of multi story buildings.'

"We will of course assist the relevant authorities fully with any inquiries they have."

“In reading The History of Nations, we find that, like individuals, they have their whims and their peculiarities, their seasons of excitement and recklessness, when they care not what they do. We find that whole communities suddenly fix their minds upon one object and go mad in its pursuit; that millions of people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first.”

Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds.

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

The American Senate’s latest sanctions attack on Russia, from a continental Europe perspective, looks more like an attack on Europe’s companies and on Germany, Europe’s largest economy.  As with the earlier US sanctions on Russia, greatly supported by the UK, the USA and UK have virtually nothing to lose by imposing sanctions on Russia, it’s continental Europe that suffers from the imposition. As usual with imposed sanctions, Russia just finds replacement goods and services, or expands its domestic supply of whatever was sanctioned. With the EUSSR mired deep in a little to no growth economy, continental Europe seems to have had enough of paying for US imposed sanctions. The rift between America and continental Europe is still widening.

Cold War Deja Vu Deepens as New Russia Sanctions Anger Europe

by Marc Champion
19 June 2017, 00:01 GMT+1
Russia on Sunday accused the U.S. of returning to “almost forgotten Cold War rhetoric,” after President Donald Trump’s decision to reinstate some sanctions on Cuba. It could have dropped “forgotten.”

There’s been a lively debate among historians and diplomats for years over whether the souring of relations between the U.S. and Russia amounts to a new Cold War, and lately the case has been getting stronger by the day.

Trump’s restoration on Friday of some of the Cold War restrictions on Cuba his predecessor, Barack Obama, eased just months ago was only one example. Earlier in the week, the U.S. Senate approved a bill to entrench and toughen sanctions on Russia that includes several vivid flashbacks to before the fall of the Berlin wall.

German Chancellor Angela Merkel added her voice on Friday to rising European condemnation of a proposal in the Senate draft that would penalize companies investing in new Russian energy pipelines. Nord Stream 2, a project to double the supply of Russian natural gas to Germany via the Baltic Sea, would be especially vulnerable.

President Ronald Reagan used similar sanctions in an attempt to thwart the joint German-Soviet construction of a natural gas pipeline in the early 1980s, only to drop them amid intense opposition from Europe. Again, Germany led the pushback.

The Senate bill would also codify a raft of existing sanctions against Russia, so that Trump would need Congressional approval to lift them. That happened in 1974, too, and the measures proved hard to kill. The legislation wasn’t repealed until a decade after their target, the U.S.S.R., had ceased to exist.

The sense of Cold-War deja vu has been building for some time, according to Robert Legvold, a professor at Columbia University and author of “Return of the Cold War.” There’s a renewed arms race, nuclear saber rattling, the buzzing of ships and planes, proxy wars and disputes over whether missile defense systems count as offense or defense.

If the trend continues, said Legvold, it will prevent the strategic cooperation between the U.S. and Russia that’s needed to prevent approaching security challenges from spinning out of control: The rise of China, the race to exploit resources in the Arctic, international terrorism and, above all, a world with nine nuclear powers that’s more complex and unstable than in the 20th century.
“Nations, like individuals, cannot become desperate gamblers with impunity. Punishment is sure to overtake them sooner or later.”
Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds.
Technology Update.
With events happening fast in the development of solar power and graphene, I’ve added this section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards? DC? A quantum computer next?

Cheap Solar Power Could Gut the Global Coal Industry by 2040

David Z. Morris  Jun 17, 2017
A new report concludes that solar energy will be a cheaper way to generate electricity than coal in most parts of the world by 2021. That crossover point, predicted to arrive much sooner than previously estimated, could trigger a massive market shift that may drastically hamstring the coal industry over subsequent decades.

According to the study, which was conducted by Bloomberg New Energy Finance, total coal generation in the U.S. is estimated to be cut in half by 2040. In Europe, the predicted drop is 87%. Researchers project that coal generation projects equal to the entire electricity output of Germany and Brazil stand to be cancelled.

Those drops are driven by more than the average price of solar energy, which is expected to decline 66% between today and 2020. The cost of wind generation is also expected to drop 47% during that time, with offshore wind farms dropping 71%.

If the report’s projections pan out, global greenhouse gas emissions could begin declining after 2026.
Renewable energy sources are not expected to entirely displace coal. According to the report, natural gas-based generation is predicted to grow by 16%. Gas, along with battery storage, is expected to play a fundamental role in filling the gaps left by solar and wind generation, which are considered "intermittent" energy sources because the sun isn't always shining and the wind isn't always blowing.

The monthly Coppock Indicators finished May

DJIA: 21,009 +157 Up. NASDAQ:  6,199 +219 Up. SP500: 2,412 +161 Up.

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